How to Find the Best Angel Investment Deals

How to Find the Best Angel Investment Deals

Groove Capital's Reed Robinson shares how he went from zero to 40-plus early-stage startup deals in two years.

In December of 2020 I had made a total of zero investments in the local startup community. As of the end of August, Groove Capital—my investment company—had made 40-plus investments, 90% of which are located in Minnesota.

Scouring the state for deals, vetting 30 to 40 pitches per month, and performing diligence would be nearly impossible to do without a (stellar) team. But for want-to-be angel investors who are just starting out, I have two important points to share.

  1. It’s possible to build your own deal flow.
  2. It’s going to take you time to do it.

Getting started

Whether angel investing is your new career or a side hustle, exploring something new begs the question: Where do I begin?
In a burgeoning startup scene like the Twin Cities, there’s an opportunity around every corner. If you simply hang a shingle on your LinkedIn, you’ll hear from an entrepreneur (or 20) who wants your money. A passive approach like this will produce mostly noise; the real Glengarry deals require more effort. The best deals are ones that blossom from trusted connections and valued relationships. And for you, that work begins today.

Getting yourself out there

Groove’s most reliable sources of quality deals come from founders, other investors, and entrepreneurial support organizations (accelerators, incubators, etc.), in that order. To build these relationships, you have to put yourself out there.
One of the best ways to start meeting people in these networks is by attending events, and lucky for you, it’s Twin Cities Startup Week. If you’ve never been, TCSW offers 100-plus events covering a wide range of innovation-related topics; it’s the front door to the area’s startup ecosystem.

Outside of TCSW, Minneapolis and St. Paul has a ton of events year round where you can discover up-and-coming companies, connect with other investors, and build out your infrastructure of reliable deal sources—Forge North and Launch Minnesota do a great job of curating the area’s event calendar.

As you’re scanning the crowds, introduce yourself and be open to exploring the wandering path that may ultimately lead to your best investment. Who knows? Maybe it’s that one time that you volunteered to mentor that entrepreneur a few years ago who was ultimately the relationship that led to your biggest return… you never know, but you have to keep planting those seeds, if you desire to have a winning portfolio five years from now.

Invest alongside other investors

Building a network of fellow investors is a great way to jumpstart your pipeline.

We’re regularly receiving quality introductions from fellow investors at Groove—they come from other institutional investors, our limited partners, and other angels in the community. In most cases, not only are we receiving an introduction, but the deal is often accompanied by some level of vetting performed by our fellow investor.

Focus on finding a trusted community of co-investors who can both check your work and expand your access to deals in areas that you might not already be exploring.

Keep building

Fast forwarding a couple of years… and you’re now swimming in a pool of quality investing opportunities. Now what?
The relationships you eventually come to rely on are constantly changing. There’s a new managing director of the accelerator you like, the journalist you like to follow leaves the publication, that event you always go to no longer exists, etc. It happens. You need to continue your outreach if you want to avoid a stale pipeline.

Ask yourself questions like am I seeing the same volume of deals? How’s the quality? Do my investments all look like me? Have I gone out of my way to introduce myself to communities that I am less familiar with? Am I experiencing any blindspots in where I am looking?

You can do it.

It sounds like a lot of work, but for the right person, it’s really fun!

I enjoy the challenge of learning a lot of new things, honing my business acumen, helping local founders succeed, and investing in something that keeps the area a great place to raise a family. Plus, you just can’t beat the thrill of finding a deal that is off the radar of every other investor.